Consumer confidence drops in March as outlook sours

A shopper walks down an aisle in a newly opened Walmart Neighborhood Market in Chicago in this September 21, 2011 file photo.

Reuters/Jim Young/Files

NEW YORK (Reuters) - Consumer confidence tumbled in March as Americans turned more pessimistic about economic prospects in the short term, according to a private sector report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes fell to 59.7 from a downwardly revised 68 in February. The figure fell short of economists' expectations of 68.

February was originally reported as 69.6.

The expectations index slid to 60.9 from 72.4, while the present situation index declined to 57.9 from 61.4.

Those expecting business conditions to get better over the next six months decreased to 14.4 percent from 18 percent, and those expecting conditions to worsen rose to 18.3 percent from 16.6 percent.

Consumers also felt more pessimistic about the labor outlook in the coming months and were mixed on their income prospects.

"The recent sequester has created uncertainty regarding the economic outlook and, as a result, consumers are less confident," Lynn Franco, director of economic indicators at The Conference Board, said in a statement.

The $85 billion in automatic government spending cuts known as the sequester was triggered at the beginning of the month when politicians failed to reach an agreement on a new deal.

The sequester came on the heels of the expiry of the payroll tax holiday at the beginning of the year, serving to raise taxes for most Americans.

Stocks slightly trimmed gains after the data as investors also took in a separate report that showed new home sales fell in February.

Consumers' assessment of the current labor market picture was mixed. Those reporting jobs were hard to get edged down to 36.2 percent from 36.9 percent the month before, but those saying jobs were plentiful fell to 9.4 percent from 10.1 percent.

Consumers felt worse about price increases with expectations for inflation in the coming 12 months rising to 5.9 percent from 5.6 percent.